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Another call to end the Empire Zone program

The state's Empire Zones are the Muhammad Ali of economic development programs. Everyone flails away, but the program survives, much like Ali and his use of rope a dope against George Foreman in Zaire.

The News did a major investigation in 2003, the Syracuse Post-Standard has done its share, and the state comptroller has issued several critical audits. Add to the list the Citizens Budget Commission, which released a critical report Tuesday.

The title says it all: It's Time To End Empire Zones.

The program is costing the state $582 million this year, according to the study, up from $30 million just eight years ago. That's no small consideration, given the state's fiscal plight.

The report said the state is getting a poor return for its money.

Among the key findings:

The Zones have proliferated to such an extent that the mission of the program has been lost. The Zones no longer correspond to distressed areas; instead, Zones are built around businesses that seek the tax credits.

The program's objectives are not measured consistently, and local agencies do not hold firms accountable for the economic development commitments they make. The program is complicated by the combination of State and local administration and compromised by a lack of transparency.

The program is failing to meet the targets that the firms themselves set when they were
approved for participation. Numerous audits have shown that recipients do not meet their
stated employment and investment goals.

I found especially damning quotes cited in the report from the upstate and downstate economic development czars under former Gov. Eliot Spitzer.

"On balance, the Empire Zone program has been a failure, and in some ways a gross failure. We have no way of knowing how many jobs have been created or retained," said Patrick Foye, who was the downstate chairman of the Empire State Development at the time he made the comment.

“Of the 9,700 companies that currently claim Empire Zone benefits, three-quarters of them are in the upstate region. Yet job growth has been sluggish or non-existent. The problem we have with the Empire Zone program is that it is not tied to any overall economic
strategy," said Dan Gundersen, Foye's upstate counterpart.

The program was tweaked several years ago. A cost-benefit analysis was imposed with the idea of weeding out bad projects and zone administrators were required to end the practice, common in Buffalo, of carving up zones into dozens of non-contiguous parcels. These were not insignificant changes.

But, according to the latest report, the reforms have not done the trick.

The question now is: "What is the governor and Legislature going to do about it?"

A more effective program has particular importance to Buffalo, which has four square miles of Empire Zones, double that of most other locales. The program here has been used mostly to provide tax breaks to downtown business interests.


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